European Stocks Advance as ECB Meeting Looms; Prudential Climbs

Markets Brace for a Move by the ECB's Mario Draghi
  • Prudential leads insurers after reporting higher profit
  • Investors see rate cut; stocks typically fall after meeting

European shares advanced for the first day in three as investors speculated on further stimulus from the European Central Bank when it meets tomorrow.

Prudential Plc led insurers higher with a 2.9 percent advance after reporting a jump in profit. Glencore Plc paced miners higher, while gains in oil helped energy shares rebound from their deepest selloff in two weeks. Burberry Group Plc fell 6.7 percent after people familiar with the matter said that HSBC Holdings Plc’s disclosure that it held 5 percent of the fashion retailer’s shares was part of a series of trades rather than a single bidder building a stake.

The Stoxx 600 added 0.5 percent to 339.14 at the close of trading, paring gains in afternoon trade after earlier rising as much as 1.3 percent. The equity gauge has recovered 12 percent from a 2013 low reached last month amid concern over global growth and a rout in banks. Investors are once again looking to the ECB for reassurance that monetary policy will focus on boosting growth. President Mario Draghi said in January that officials will consider the possibility of more stimulus at the upcoming gathering.

“Expectations are quite high for tomorrow,” said Daniel Murray, the London-based head of research at EFG Asset Management. “There’s talk of rate cuts, increasing the size of the asset-purchase program, and expanding the range of products that the ECB will buy. Let’s see how good Draghi is at playing the market; he has built up expectations before and found them hard to meet.”

While all economists in a Bloomberg survey expect the central bank to cut interest rates, and 73 percent project them to boost the amount of money put into the financial system through bond purchases, fund managers aren’t optimistic about a post-decision equity rally. In the first year of quantitative easing, the Euro Stoxx 50 Index fell about 17 percent, and volatility reached levels not seen since 2008. The gauge has dropped in each month but one following an ECB meeting since April.

Mediaset SpA led gains among media-related companies after a report that Telecom Italia SpA’s wireless infrastructure unit may offer 200 million euros ($220 million) for 1,000 transmission towers controlled by a Mediaset subsidiary. Shares extended their advance to 6.8 percent after Les Echos reported that Vivendi SA wants to buy Mediaset’s stake in a pay-TV unit.

Among other stocks moving on corporate news, BMW AG fell 1.9 percent after predicting only a slight increase in deliveries, and not offering a special dividend as it celebrates its 100th anniversary.

G4S Plc slid 12 percent after the British security provider posted worse-than-expected full-year revenue. Royal Boskalis Westminster NV lost 16 percent after the shipping company said net profit will be substantially lower in 2016. Restaurant Group Plc tumbled 23 percent, the most since 2008, after reporting a 1.5 percent drop in like-for-like sales for the start of the year

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